According to ChainCatcher's message, Coinbase recently released an outlook on the cryptocurrency market, highlighting five areas worth watching in 2025:
1. Stablecoins are just getting started
Stablecoins have become a killer application in the cryptocurrency space. As of December 1, 2024, the stablecoin market capitalization grew 48% to a historic high of $193 billion, and some analysts predict this figure could grow to $30 trillion within the next five years. So far this year, stablecoin trading volume has exceeded $27 trillion, up about 3 times year-over-year. As stablecoins continue to soar, we will soon see their first and primary use case being global capital flows and commerce, rather than trading;
2. Tokenization of Real-World Assets (RWA) is poised for significant growth
According to data from rwa.xyz, as of December 1, tokenized RWA grew over 60% to $13.5 billion (excluding stablecoins), with tokenization continuing to make significant progress in 2024. Companies are experimenting with using tokenized assets as collateral for other financial transactions, such as those involving derivatives, which can simplify operations and reduce risk. Furthermore, the RWA trend is outpacing traditional assets like US Treasuries and money market funds, gaining traction in private credit, commodities, corporate bonds, real estate, and insurance. We believe the cumulative effect of continued investment and technological improvements in 2025 should lay the foundation for tokenization to become a cornerstone of the current crypto market cycle. Ultimately, we think tokenization can simplify the construction and investment process of entire portfolios by bringing it on-chain, although this may still take a few years;
3. Crypto ETFs have permanently changed the supply and demand dynamics of cryptocurrencies
After the record-breaking success of the first US spot Bitcoin ETF, the entire cryptocurrency market has changed. Nearly every type of institutional investor, including endowments, pension funds, hedge funds, investment advisors, and family offices, now owns crypto ETFs. With increasing institutional adoption, we believe these holders will provide a long-term, stable source of demand for the asset class.
Looking ahead, the industry is focused on the potential approval of spot ETFs for tokens like XRP, SOL, LTC, and HBAR in the US, but we think meaningful institutional demand in the near term may be limited to a small subset of assets. We're more interested in what would happen if the SEC lifted the authorization for ETFs to create and redeem shares in cash rather than physical, or allowed these products to incorporate staking. These changes could improve the potential returns for ETF holders, making ETFs more attractive to investors;
4. A DeFi renaissance will usher in a new era
DeFi suffered some blows in the last cycle, but a more sustainable and resilient ecosystem has emerged. Lending protocol TVL has reached new highs, while DEX trading volume share (relative to CEXes) has reached peaks. Additionally, the shift in the US regulatory landscape and the adoption of on-chain verification may help pave a clearer path for traditional institutional investors to participate in DeFi. All of this suggests that DeFi may significantly expand its influence in the near future;
5. Regulation will ultimately shift from headwind to tailwind
For years, the US has suffered from unclear and inconsistent regulation, but the tide has now turned, and the US Congress is poised to be the most crypto-friendly in history. Both the House and Senate have bipartisan support for cryptocurrencies, meaning US regulation will provide a tailwind for crypto's performance in 2025.
Cryptocurrencies becoming an election issue highlights the urgency for policymakers to stay aligned with the evolving needs of this influential voting bloc, and we think the chances of achieving new legislative milestones are high. Specifically, we expect the US to establish a comprehensive regulatory framework, enact robust stablecoin legislation, and end the enforcement-focused regulatory era. The US is not the only jurisdiction preparing to make progress on regulation. Many G20 countries and major financial centers are also developing rules to accommodate digital assets, which will help create a more favorable environment for innovation and growth. Collectively, these initiatives can open the doors for more individuals and institutions to participate in the crypto economy with confidence.
As the regulatory and technological landscape evolves, the crypto ecosystem is expected to grow significantly, as broader adoption will drive the industry closer to realizing its full potential. The breakthroughs and advancements in 2025 are likely to determine the long-term trajectory of the crypto industry for decades to come. It will be a pivotal year.
